New Partnerships, More Facebook Ads

The partnership between the world’s largest social networking site and three real world giants in data collection for advertisers is unheard-of. It is the collision of large online and offline user data repositories for the benefit of marketers.

On Wednesday, Facebook announced in a blog post that businesses now have the option to improve their ads on the social network through consumer data providers BlueKai, Acxiom, Datalogix, and Epsilon. While BlueKai has established its name as a broker and warehouse for online data, the other three are known as consumer data collectors in the real world.

In September last year Facebook released its custom audiences tool so marketers could reach customers through relevant Facebook ads.

On Wednesday an unnamed source, who spoke to NBC News’s Red Tape Chronicles, assured that Facebook will not share user data to its new partners.

However, he said Facebook will allow its advertising clients to enlist help from offline data providers for targeted advertising on the website. For example, a loyalty card user may see Facebook ads about his or her shopping habits.

The source said Facebook will use extra security to ensure that data will not flow out to these data storage firms. And the firm will use a technique that will blind consumers to the matches involving the companies.

Even so, consumer privacy watchdogs and advocates are unconvinced on the scope of Facebook’s partnerships with external data collectors.

Jeff Chester, executive director of the Center for Digital Democracy (CDC), told NBC that Facebook needs to control its use of outside data brokers because it incurs targeted advertising to users for the benefit of marketers.

He said these data collectors have huge repositories of online and offline information about users.

News broke of the imminent partnerships when AdAge reported on February that Facebook is testing ad targeting by matching store purchases with user profiles. But the data giants either directed or referred questions about the deal to Facebook, and the social network kept mum about it.

The three real world data giants have huge databases full of email addresses, shopping habits, and more, and all these information are sent to consumers as targeted junk mails or in other forms of advertisements.

Because they already proved their services offline, these firms now want to expand their marketing intelligence online. And a partnership with Facebook is more than enough to kick off their campaign.

Offline transactions are relevant online because it’s easier to tell a user’s intent compared to banner ad clicks, says a Datalogix brochure about the collision. It imposes that a click-through is not a sale.

Datalogix and Facebook already crossed paths last year when the social networking company conducted a research with the data collector to prove that Facebook ads promoted offline purchases.

The deal was for Datalogix to monitor Facebook users who are already in its database, and determine if they were encouraged to buy at grocery stores after watching different kinds of Facebook ads.

The research failed but Facebook said it saw how its ads effectively encouraged shoppers to buy groceries.

According to the source, the agreement will allow Acxiom, Datalogix, and Epsilon to upload customer lists to Facebook through tagged email addresses or phone numbers. Then Facebook will match the data to its users and build “custom audiences.”

Custom audiences can be narrowed down to a specific age group, location, favorite soda, and so on. These consumers could be the target of beverage companies.

The source said Facebook will not see the names of these audiences, because its partners will provide hashed data to the social network.

In September last year, Rainey Reitman, activism director of the Electronic Frontier Foundation, dug deeper on the exchange of data between Facebook and Datalogix.

Reitman did not raise any privacy concerns from the partnership, but she said Facebook must ensure that it will safeguard the flow of data between them.

Facebook treasures its database because of financial interest, so it will not do something that could jeopardize user privacy, she added.

She was troubled, however, that loyalty card users will unexpectedly find their data in a Facebook ad.

In an interview with NBC News, privacy expert Larry Ponemon, founder of The Ponemon Institute, said privacy issues were unavoidable because highly targeted advertisements could benefit users.

But he advised consumers and watchdogs to keep an eye on large collisions of online and offline data.

In 1999, DoubleClick and Abacus Direct inked an advertising deal that worried regulators because of the ad network’s online and offline user tracking service.

Ponemon said the infamous deal didn’t go far, but Facebook can push through if it promises not to hold the data the way they did.

He added that consumer expectation is often overlooked in attacks on privacy. This can get serious if Facebook gains access to consumer data.

The problem with the partnership of giant data collectors – Facebook, Acxiom, Datalogix, Epsilon, and so on – is the creation of the single largest written account on consumers. It takes great responsibility to protect a massive database, especially when money is involved.

Ponemon said we will have to wait and see if the partnerships will either impair our privacy rights or amaze us through its creative advertising.

CDC executive director Chester said consumers have the right to know if and when these databases are shared because they provided private data. Consumers must have the option to stop it.

He said Facebook and other companies pull all the information it can about mobile phone users to monitor their shopping habits on these devices.

But privacy advocates want Facebook to give users the ability to pick what personal details it can use for targeted ads.

Datalogix allows users to opt out of its online digital ads through its privacy page here, directly under the part labeled “Choice.”